Exhibit (d)(24)
SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Second
Amendment"), dated as of August 29, 2001, by and among Koninklijke Ahold N.V., a
public company with limited liability organized and existing under the laws of
The Netherlands ("Royal Ahold"), Ahold U.S.A. Holdings, Inc., a Maryland
corporation and an indirect wholly owned subsidiary of Royal Ahold ("Parent"),
Bean Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and Peapod, Inc., a Delaware corporation (the "Company").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Merger Agreement referred to below.
RECITALS
WHEREAS, Royal Ahold, Parent, Purchaser and the Company are parties to an
Agreement and Plan of Merger dated as of July 16, 2001, as amended by the First
Amendment dated July 26, 2001 (the "Merger Agreement");
WHEREAS, the Merger Agreement provides that at the Effective Time each
share of preferred stock of the Company owned by Royal Ahold or any direct or
indirect wholly owned subsidiary of Royal Ahold immediately prior to the
Effective Time shall be canceled and extinguished;
WHEREAS, the parties have determined that at the Effective Time each share
of preferred stock of the Company owned by Royal Ahold or any direct or indirect
wholly owned subsidiary of Royal Ahold immediately prior to the Effective Time
shall not be canceled and extinguished;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
1. Amendments. The Merger Agreement is hereby amended as follows:
(a) Section 3.01(b) of the Merger Agreement is hereby amended by
deleting the words "and preferred stock" in the first line.
(b) Article 3 of the Merger Agreement is hereby amended by adding the
following section following Section 3.05:
"SECTION 3.06. Preferred Stock and Warrants. (a) As promptly as
practicable, the Company shall file with the Secretary of State of the State of
Delaware a Certificate of Designations of Series D Convertible Preferred Stock
of the Company in the form attached hereto as Annex B.
(b) As promptly as practicable, Royal Ahold and the Company shall
exchange the 726,371 shares of Series C Preferred Stock held by Royal Ahold for
726,371 shares of Series D Convertible Preferred Stock of the Company by (i) the
Company issuing and delivering to Royal Ahold certificates representing an
aggregate of 726,371 shares of Series D Convertible Preferred Stock in
definitive form and registered in the name of Royal Ahold, and (ii) Royal Ahold
delivering to the Company certificates representing 726,371 shares of the Series
C Preferred Stock and duly executed stock powers in favor of the Company in
respect of such certificates. The parties hereto hereby acknowledge and agree
that as of the time of such exchange, dividends had accrued and become payable
with respect to the Series C Preferred Stock. The Company hereby agrees that,
subject to the letter agreement dated March 30, 2001 between Royal Ahold and the
Company, such dividends are due and owing to Royal Ahold and shall be
accumulated, compounded and paid in accordance with the terms of the Series C
Certificate of Designations.
(c) Each share of Series D Convertible Preferred Stock of the Company
outstanding immediately prior to the Effective Time shall remain outstanding as
Series D Convertible Preferred Stock of the Surviving Corporation with the same
rights, powers and privilege as immediately prior to the Effective Time.
(d) As promptly as practicable, (a) Royal Ahold and its Subsidiaries
shall exercise a sufficient number of Warrants, at the initial exercise price
thereof, to result in Royal Ahold and its Subsidiaries owning at least 90% of
the outstanding shares of Common Stock, and (b) Royal Ahold and its Subsidiaries
shall transfer all shares of Common Stock owned thereby to Purchaser in order to
effectuate the Merger pursuant to Section 253 of the Delaware Law. Upon the
exercise of Warrants by Royal Ahold or any of its Subsidiaries, the Company
shall issue and deliver shares of Common Stock to Royal Ahold or such Subsidiary
in accordance with the terms of the warrant agreement pursuant to which such
Warrants were granted."
(c) The Merger Agreement is hereby amended by inserting the Form of
Certificate of Designations of Series D Convertible Preferred Stock of the
Company, attached hereto as Annex A, as Annex B to the Merger Agreement.
(d) Except as amended hereby, the Merger Agreement remains unchanged
and in full force and effect.
2. Representations and Warranties. The Company represents and warrants to
Parent and the Purchaser that (a) the Company has the requisite corporate power
and authority to execute, deliver and perform this Second Amendment; (b) the
execution and delivery of this Second Amendment have been duly authorized by the
Special Committee and the Board of Directors of the Company and this Second
Amendment constitutes the Company's legal, valid and binding obligation,
enforceable against it in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, relating to
creditor's rights generally, and (ii) equitable remedies of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought; (c) the execution, delivery and performance by the Company of
this Second Amendment does not violate, conflict with or constitute a breach of
the Company's
-2-
Certificate of Incorporation or By-laws, any Law applicable to it or any court
order, contract or agreement by which it or its properties are bound, except for
such violations, breaches, defaults or rights which could not reasonably be
expected to have a Material Adverse Effect; (d) no consent, approval or
authorization of, or filing with, any Governmental Entity, and no consent of any
other Person, is required in connection with the Company's execution, delivery,
and performance of this Second Amendment, except for such consents, approvals,
authorizations, or filings the failure of which to receive, obtain or make could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and could not, individually or in the aggregate, reasonably be
expected to prevent or materially delay the consummation of the Merger.
3. Miscellaneous.
(a) Binding Effect. This Second Amendment shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. Notwithstanding anything contained in this Second Amendment
to the contrary, nothing in this Second Amendment, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Second
Amendment.
(b) Governing Law; Consent to Jurisdiction. This Second Amendment
shall be governed by and construed in accordance with the laws of the State of
New York (except that the statutory and fiduciary duty law of the State of
Delaware shall apply to the extent otherwise applicable hereto) without regard
to the principles of conflicts of laws thereof. Each of the parties hereto (i)
consents to submit itself to the exclusive personal jurisdiction of any New York
state court or any federal court located in the State of New York in the event
any dispute arises out of this Second Amendment or any of the transactions
contemplated by this Second Amendment and (ii) agrees that it shall not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court.
(c) Counterparts. This Second Amendment may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies of this
Second Amendment each signed by less than all, but together signed by all of the
parties hereto. This Second Amendment shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.
(d) Headings. Headings of the sections of this Second Amendment are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
(e) Severability. Any term or provision of this Second Amendment which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent (and only to the extent) of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Second Amendment or affecting the validity or
enforceability of any of the terms or provisions of this Second Amendment in any
other jurisdiction. If any provision of this Second Amendment is so broad as to
be unenforceable, the
-3-
provision shall be interpreted to be only so broad as is enforceable. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Second Amendment so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
(f) Waiver of Jury Trial. EACH PARTY TO THIS SECOND AMENDMENT WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECOND AMENDMENT.
(g) Execution. This Second Amendment may be executed by facsimile
signatures by any party and such signature shall be deemed binding for all
purposes hereof, without delivery of an original signature being thereafter
required.
[SIGNATURES PAGE FOLLOWS]
-4-
IN WITNESS WHEREOF, the parties have executed this Second Amendment
and caused the same to be duly delivered on their behalf on the day and year
first written above.
KONINKLIJKE AHOLD N.V.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
AHOLD U.S.A. HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
BEAN ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
PEAPOD, INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chairman
-5-
ANNEX A TO SECOND AMENDMENT TO MERGER AGREEMENT
ANNEX B - FORM OF CERTIFICATE OF DESIGNATIONS
OF SERIES D CONVERTIBLE PREFERRED STOCK OF THE COMPANY
CERTIFICATE OF DESIGNATIONS
OF
SERIES D CONVERTIBLE
PREFERRED STOCK
OF
PEAPOD, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
PEAPOD, INC., a Delaware corporation (the "Company"), hereby certifies
that the following resolution was duly approved and adopted by the Board of
Directors of the Company on August 29, 2001, which resolution remains in full
force and effect on the date hereof:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors") by
the provisions of the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation") and its Restated By-Laws (the
"Bylaws"), and in accordance with Section 151 of the General Corporation Law of
the State of Delaware, there is hereby created, out of the 10,000,000 shares of
Preferred Stock, par value $0.01 per share, of the Company authorized and
unissued in Article Fourth of the Certificate of Incorporation (the "Preferred
Stock"), a series of the Preferred Stock consisting of 730,000 shares, which
series shall have the following powers, designations, preferences and relative,
participating, optional or other rights, and the following qualifications,
limitations and restrictions (in addition to any powers, designations,
preferences and relative, participating, optional or other rights, and any
qualifications, limitations and restrictions, set forth in the Certificate of
Incorporation which are applicable to the Preferred Stock):
Section 1. Designation of Amount. The 730,000 shares of Preferred
Stock shall be designated the "Series D Convertible Preferred Stock" (the
"Series D Preferred Stock"), par value $0.01 per share and the authorized number
of shares constituting such series shall be 730,000.
Section 2. Certain Definitions,
Unless the context otherwise requires, the terms defined in this
Section 2 shall have, for all purposes of this resolution, the meanings
specified (with terms defined in the singular having comparable meanings when
used in the plural).
"Additional Dividend Payment Date" shall have the meaning set forth in
Section 3(g).
"Additional Dividends" shall have the meaning set forth in Section
3(g).
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person and, in the case of a person who is an
individual, shall include (i) members of such specified person's immediate
family (as defined in Instruction 2 of Item 404(a) of Regulation S-K under the
Securities Act) and (ii) trusts, the trustee and all beneficiaries of which are
such specified person or members of such person's immediate family as determined
in accordance with the foregoing clause (i). For the purposes of this
definition, "control," when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing. Notwithstanding the foregoing, for purposes of
this Certificate of Designations, the Purchaser and its Affiliates shall not be
deemed Affiliates of the Company.
"Appraisal Procedure" if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for purposes
of the definition of "Fair Market Value" or the fair market value, as to any
other property (in either case, the "valuation amount"). The valuation amount
shall be determined in good faith by the Board of Directors; provided, however,
that if the Requisite Holders disagree with such valuation amount within a
reasonable period of time (not to exceed twenty (20) days after notice thereof),
the valuation amount shall be determined by an investment banking firm of
national recognition, which firm shall be reasonably acceptable to the Board of
Directors and the Requisite Holders. If the Board of Directors and the Requisite
Holders are unable to agree upon an acceptable investment banking firm within
ten (10) days after the date either party proposed that one be selected, the
investment banking firm will be selected by an arbitrator located in New York
City, New York, selected by the American Arbitration Association (or if such
organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the investment banking firm
(within ten (10) days of its appointment) from a list, jointly prepared by the
Board of Directors and the Requisite Holders, of not more than six investment
banking firms of national standing in the United States, of which no more than
three may be named by the Board of Directors and no more than three may be named
by the Requisite Holders. The arbitrator may consider, within the ten-day period
allotted, arguments from the parties regarding which investment banking firm to
choose, but the selection by the arbitrator shall be made in its sole discretion
from the list of six. The Board of Directors and the Requisite Holders shall
submit their respective valuations and other relevant data to the investment
banking firm, and the investment banking firm shall as soon as practicable
thereafter make its own determination of the valuation amount. The final
valuation amount for purposes hereof shall be the average of the two valuation
amounts closest together, as determined by the investment banking firm, from
among the valuation amounts submitted by the Company and the Requisite Holders
and the valuation amount calculated by the investment banking firm. The
determination of the final valuation amount by such investment-banking firm
shall be final and binding upon the parties. The Company shall pay the fees and
expenses of the investment banking firm and arbitrator (if any) used to
determine the valuation amount. If
-2-
required by any such investment banking firm or arbitrator, the Company shall
execute a retainer and engagement letter containing reasonable terms and
conditions, including, without limitation, customary provisions concerning the
rights of indemnification and contribution by the Company in favor of such
investment banking firm or arbitrator and its officers, directors, partners,
employees, agents and affiliates.
"Business Day" shall mean a day other than a Saturday, Sunday or day
on which banking institutions in New York are authorized or required to remain
closed.
"Change of Control" shall mean the occurrence of any of the following
events:
(i) the adoption or approval by the Board of Directors of the Company
of a plan or proposal relating to the sale or other disposition of all or
substantially all of the assets of the Company;
(ii) the adoption or approval by the Board of Directors of the Company
of a plan or proposal relating to the liquidation, dissolution or winding
up of the Company;
(iii) the acquisition by any individual, entity or group (other than a
group including the Purchaser), including any "person," within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange
Act, of more than 50% of the then outstanding shares of Common Stock;
(iv) the first day on which the individuals (other than the Preferred
Stock Directors) who are members of the Board of Directors as of April 14,
2000 (collectively, the "Incumbent Board") cease for any reason to
constitute a majority of the Board of Directors; provided that any
individual who becomes a director of the Company subsequent to April 14,
2000, whose appointment or nomination for election by the Company's
stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided, further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest (defined to be an actual or threatened
solicitation by a person or group for the purpose of opposing a
solicitation by any other person or group with respect to the election or
removal of directors) or any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board of
Directors shall not be deemed to be a member of the Incumbent Board;
(v) the 30th consecutive day on which the Common Stock is no longer
listed for trading on a United States national securities exchange or
authorized for quotation in the NASDAQ Stock Market; or
(vi) the Company shall have failed to comply in any material respect
with any of its agreements contained in any of the Documents, provided,
that, if such failure to comply
-3-
is capable of being cured, 30 days shall have elapsed since such failure to
comply and such failure shall not have been cured.
"Change of Control Election" shall have the meaning set forth in
Section 5(a).
"Change of Control Redemption Price" shall have the meaning set forth
in Section 5(a).
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company.
"Conversion Date" shall have the meaning set forth in Section 7(e).
"Conversion Price" shall have the meaning set forth in Section 7(b).
"Credit and Security Agreements" shall have the meaning set forth in
the Purchase Agreement.
"Daily Market Price" shall mean, with respect to one share of Common
Stock and for any Business Day: (i) if the Common Stock is then listed on a
national securities exchange or is authorized for quotation on NASDAQ and is
designated as a National Market System security, the last sale price of one
share of Common Stock, regular way, on such day on the principal stock exchange
or market system on which such Common Stock is then listed or authorized for
quotation, or, if no such sale takes place on such day, the average of the
closing bid and asked prices for one share of Common Stock on such day as
reported on such stock exchange or market system or (ii) if the Common Stock is
not then listed or authorized for quotation on any national securities exchange
or designated as a National Market System security on NASDAQ but is traded
over-the-counter, the average of the closing bid and asked prices for one share
of Common Stock as reported on NASDAQ or the Electronic Bulletin Board or in the
National Daily Quotation Sheets, as applicable.
"Dividend Rate" shall have the meaning set forth in Section 3(a).
"Documents" shall mean the Purchase Agreement, the Warrants, the
Registration Rights Agreement, the Services Agreement, the Certificate of
Incorporation, the Bylaws, the Credit and Security Agreements, the Joint
Development and Licensing Agreement, the Voting Agreements and this Certificate
of Designations.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exercise Period" shall have the meaning set forth in Section 5(a).
"Event of Non-Compliance" shall mean (i) any failure of the Company or
the Board of Directors to comply with Section 6 of this Certificate of
Designations, Article VIII of the Bylaws of the Company, (ii) any failure of the
Company or the Board of Directors to comply with Section 3 of this Certificate
of Designations or any failure of the Board of Directors of the
-4-
Company to declare a quarterly dividend payment provided for in Section 3(a) or
to pay such dividend on the dividend payment date provided therefor in Section
3(b), (iii) any failure of the Company or the Board of Directors to comply with
Section 5, 7 or 8 of this Certificate of Designations; provided, that a failure
to give a notice within a specified time period shall be deemed an Event of
Non-Compliance only until such notice is given (unless the delay in giving such
notice adversely affects the ability of the person to whom such notice was given
to exercise the rights with respect to which such notice was given) (iv) any
other failure of the Company to comply in any material respect with any of its
agreements in any of the Documents; provided, however, that if any such failure
to comply is capable of being cured, 30 days shall have elapsed since such
failure has not been cured or (v) any obligation of the Company, whether as
principal, guarantor, surety or other obligor, for the payment of indebtedness
for borrowed money in excess of $10,000,000 (x) shall become or shall be
declared due and payable prior to the expressed maturity thereof, or (y) shall
not be paid when due or within any grace period for the payment thereof, and
such default shall remain uncured for 30 days.
"Excluded Securities" shall have the meaning set forth in Section
7(d).
"Fair Market Value" shall mean, as of any specified date and as to any
security, the Ten Day Average of the closing prices of such security's sales on
all domestic securities exchanges on which such security may at the time be
listed, or, if there have been no sales on any such exchange on any day included
in the Ten Day Average, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day included in the
Ten Day Average, such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ Stock Market as of 4:00
P.M., New York City time, on such day, or, if on any day included in the Ten Day
Average such security is not quoted in the NASDAQ Stock Market, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
excluding any trades that are not bona fide, arm's length transactions). If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ Stock Market or the domestic over-the-counter market, the
"Fair Market Value" of such security shall be the fair market value thereof as
determined in accordance with the Appraisal Procedure, using any appropriate
valuation method, assuming an arms-length sale to an independent party. In
determining the fair market value of Common Stock, a sale of all of the issued
and outstanding Common Stock will be assumed, without giving regard to the lack
of liquidity of such stock due to any restrictions (contractual or otherwise)
applicable thereto or any discount for minority interests and assuming the
conversion or exchange of all securities then outstanding that are convertible
into or exchangeable for Common Stock and the exercise of all rights and
warrants then outstanding and exercisable to purchase shares of such stock or
securities convertible into or exchangeable for shares of such stock; provided,
however that such assumption will not include those securities, rights and
warrants convertible into Common Stock where the conversion, exchange or
exercise price per share is greater than the fair market value; provided,
further, however, that fair market value shall be determined with regard to the
relative priority of each class or series of Common Stock (if more than one
class or series exists.) "Fair Market Value" means with respect to property
other than securities, the "fair market value" determined in accordance with the
Appraisal Procedure.
-5-
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, which are in effect
from time to time, consistently applied.
"Joint Development and Licensing Agreement" shall have the meaning set
forth in the Purchase Agreement.
"Liquidation Preference" shall have the meaning set forth in Section
4.
"New Securities" shall mean any shares of capital stock of the
Company, whether or not now authorized, and securities of any type whatsoever
that are, or may become, convertible into or exchangeable or exercisable for
shares of capital stock, other than (i) Excluded Securities; (ii) the Series D
Preferred Stock (or the Common Stock issuable upon conversion thereof); (iii)
the Warrants (and Common Stock issuable upon exercise thereof); (iv) securities
issued pursuant to the Company's bona fide acquisition of another corporation by
merger, purchase of substantially all assets or other reorganization, which
acquisition has been approved by the Board of Directors; and (v) securities
issued in connection with any stock split, stock dividend or recapitalization of
the Company for which an adjustment is made to the terms of conversion of the
Series D Preferred Stock hereunder.
"Original Issuance Date" shall mean, with respect to any shares of
Series D Preferred Stock, the date of issuance of such shares.
"Permitted Transferee" shall mean, with respect to any person, any
other person.
"person" shall mean any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Preferred Stock Director" shall have the meaning set forth in Section
5(b).
"Previously Issued Warrant" shall mean the warrant, dated as of April
10, 2000, issued by the Company in favor of the Purchaser for 100,000 shares of
Common Stock.
"Pro Rata Amount" shall mean, at any time, with respect to any holder
of shares of Series D Preferred Stock, the ratio of (i) the number of shares of
Common Stock held by such holder (on a fully-diluted basis), to (ii) the total
number of shares of Common Stock of the Company outstanding (on a fully-diluted
basis), in the case of both clauses (i) and (ii), including all outstanding
securities convertible into or exchangeable or exercisable for Common Stock on
an as-converted or exercised basis (including, but not limited to, the Series D
Preferred Stock and outstanding options and warrants exercisable for Common
Stock).
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
April 13, 2000, by and between the Company and the Purchaser.
-6-
"Purchaser" shall mean Koninklijke Ahold N.V., a public company with
limited liability incorporated under the laws of the Netherlands.
"Redemption Price" shall have the meaning set forth in Section 5.
"Registration Rights Agreement" shall mean the registration rights
agreement to be entered into by the Company and the Purchaser pursuant to the
Purchase Agreement.
"Requisite Holders" shall mean the holders of at least a majority of
the then outstanding Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Series D Preferred Stock" shall mean the Series D Preferred Stock
authorized hereby.
"Shares" shall mean, collectively, shares of converted Common Stock
and shares of Series D Preferred Stock. Whenever this Certificate refers to a
number or percentage of Shares, such number or percentage shall be calculated as
if, immediately prior to such calculation, all shares of Series D Preferred
Stock and all other convertible or exchangeable securities and all warrants and
options held by the Purchaser and its Permitted Transferees had been converted
into shares of Common Stock in accordance with their terms, regardless of the
existence of any restrictions on such conversion or exercise.
"subsidiary" means, with respect to any person, (a) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by a subsidiary of such person, or by such person and one or more subsidiaries
of such person, (b) a partnership in which such person or a subsidiary of such
person is, at the date of determination, a general partner of such partnership,
or (c) any other person (other than a corporation) in which such person, a
subsidiary of such person or such person and one or more subsidiaries of such
person, directly or indirectly, at the date of determination thereof, has (i) at
least a majority ownership interest, (ii) the power to elect or direct the
election of the directors or other governing body of such person, or (iii) the
power to direct or cause the direction of the affairs or management of such
person. For purposes of this definition, a person is deemed to own any capital
stock or other ownership interest if such person has the right to acquire such
capital stock or other ownership interest, whether through the exercise of any
purchase option, conversion privilege or similar right.
"Subsidiary" shall mean a subsidiary of the Company.
"Ten Day Average" means, with respect to any prices and in connection
with the calculation of Fair Market Value, the average of such prices over the
ten consecutive Business Days ending on the Business Day immediately prior to
the day as of which "Fair Market Value" is being determined.
"Voting Agreements" shall have the meaning set forth in the Purchase
Agreement.
-7-
"Warrants" shall have the meaning set forth in the Purchase Agreement.
Section 3. Dividends. (a) The holders of the outstanding shares of
Series D Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds of the Company legally available
therefor, cumulative dividends, accumulating on a daily basis at the Dividend
Rate from the Original Issuance Date through and including the date on which
such dividends are paid. The "Dividend Rate" shall be (i) from the Original
Issuance Date until June 30, 2008 (x) if there shall exist any Event of
Non-Compliance, 12.5% per annum for all quarterly dividend periods commencing on
the date of the occurrence of such Event of Non-Compliance and ending on the
date that such Event of Non-Compliance is cured and (y) 8% per annum for all
other quarterly dividend periods from the Original Issuance Date until June 30,
2008 and (ii) 16% per annum for all quarterly dividend periods from and after
June 30, 2008. The amount of any dividends per share of Series D Preferred Stock
for any full quarterly period shall be computed by multiplying the Dividend Rate
for such quarterly dividend period by the Liquidation Preference per share and
dividing the result by four. Dividends payable on the shares of Series D
Preferred Stock for any period less than a full quarterly dividend period shall
be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed for any period less than one month.
(b) Dividends shall be payable in arrears on the last day of each of
March, June, September and December, commencing on June 30, 2000; provided that:
(i) if any such payment date is not a Business Day, then such dividend shall be
payable on the next Business Day, and (ii) accumulated and unpaid dividends for
any prior quarterly period may be paid at any time. Dividends shall accumulate
on shares of Series D Preferred Stock from their Original Issuance Date and be
cumulative whether or not earned or declared and whether or not there are
profits, surplus or other funds of the Company legally available for the payment
of dividends. Each such dividend shall be paid to the holders of record of the
Series D Preferred Stock as they shall appear on the stock register of the
Company on such record date, not exceeding forty-five (45) days nor less than
ten (10) days preceding any dividend payment date, as shall be fixed by the
Board of Directors of the Company or a duly authorized committee thereof.
(c) [intentionally omitted]
(d) Holders of shares of the Series D Preferred Stock shall be
entitled to full cumulative dividends, as herein provided, on the Series D
Preferred Stock and no additional amounts, except as set forth in paragraph (g)
below. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series D Preferred Stock that
may be in arrears.
(e) Unless and until full cumulative dividends on the shares of Series
D Preferred Stock in respect of all past quarterly dividend periods have been
paid, and the full amount of dividends on the shares of Series D Preferred Stock
in respect of the then current quarterly dividend period shall have been or are
contemporaneously declared in full and sums set aside for the payment thereof,
(i) no dividends shall be paid or declared or set aside for payment or other
distribution upon the Common Stock, or any other capital stock of the Company
ranking junior to the Series D Preferred Stock as to dividends (together with
the Common Stock, "Junior
-8-
Stock"), other than in shares of, or warrants or rights to acquire, Junior
Stock; and (ii) no shares of Junior Stock or any other Securities of the Company
or any warrants, rights, calls or options (other than any cashless exercises of
options or option buybacks) exercisable for or convertible into a share of
Junior Stock or any other Securities of the Company shall be redeemed, retired,
purchased or otherwise acquired for any consideration (or any payment made to or
available for a sinking fund for the redemption of any such shares) by the
Company or any Subsidiary (except by conversion into or exchange for shares of
Junior Stock).
(f) The terms "accumulated dividends," "accrued dividends," "dividends
accumulated," "dividends accrued" and "dividends in arrears," whenever used
herein with reference to shares of Series D Preferred Stock shall be deemed to
mean an amount which shall be equal to dividends thereon at the Dividend Rate
per share from the date or dates on which such dividends commence to accumulate
to the end of the then current quarterly dividend period for such Preferred
Stock (or, in the case of redemption, to the date of redemption), whether or not
earned or declared and whether or not assets for the Company are legally
available therefor, and if full dividends are not declared or paid, then such
dividends shall cumulate, with additional dividends thereon, compounded
quarterly, at the Dividend Rate, for each quarterly period during which such
dividends remain unpaid, less the amount of all such dividends paid, or declared
in full and sums set aside for the payment thereof, upon such shares of Series D
Preferred Stock.
(g) In the event any dividends are declared or paid with respect to
the Common Stock or any Junior Stock, the holders of the Series D Preferred
Stock as of the record date established by the Board of Directors for such
dividend shall be entitled to receive as additional dividends (the "Additional
Dividends") an amount (whether in the form of cash, securities or other
property) equal to the amount (and in the form) of the dividends that such
holder would have received had the Series D Preferred Stock been converted into
Common Stock as of the date immediately prior to the record date of such
dividend, such Additional Dividends to be payable on the payment date of the
dividend established by the Board of Directors (the "Additional Dividend Payment
Date"). The record date for any such Additional Dividends shall be the record
date for the applicable dividend, and any such Additional Dividends shall be
payable to the persons in whose name this Series D Preferred Stock is registered
at the close of business on the applicable record date.
(h) Notwithstanding anything to the contrary herein, in the event any
conversion, redemption or liquidation occurs as of a date other than on a
dividend payment date, the holders of Series D Preferred Stock shall be paid a
pro rata dividend equal to the dividend payable for that quarterly dividend
period multiplied by a fraction, the numerator of which is the number of days
that have elapsed since the last dividend payment date and the denominator of
which is the number of days in the quarterly dividend period in which the
conversion, redemption or liquidation occurs.
(i) Immediately prior to authorizing or making any distribution in
redemption or liquidation with respect to the Series D Preferred Stock (other
than a purchase or acquisition of Series D Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
Series D Preferred Stock), the Board of Directors shall, to the extent of any
funds legally available therefor, declare a dividend on the Series D Preferred
Stock payable on
-9-
the distribution date in an amount equal to any accumulated and unpaid dividends
on the Series D Preferred Stock as of such date.
Section 4. Liquidation Preference. In the event of a liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Series D Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are
stated capital or surplus of any nature, an amount on such date equal to the
greater of (a) $100 per share of Series D Preferred Stock (the "Liquidation
Preference") plus the amount of any accumulated and unpaid dividends as of such
date, calculated pursuant to Section 3 hereinabove, or (b) the amount that
holders of the Series D Preferred Stock would be entitled to receive if they had
converted all of their shares of Series D Preferred Stock into Common Stock
immediately prior to such liquidation, dissolution or winding up. Such payment
shall be made before any payment shall be made or any assets distributed to the
holders of any class or series of the Common Stock or any other class or series
of the Company's capital stock ranking junior as to liquidation rights to the
Series D Preferred Stock. If upon any such liquidation, dissolution or winding
up of the Company the assets available for payment of the Liquidation Preference
are insufficient to permit the payment to the holders of the Series D Preferred
Stock of the full preferential amounts described in this paragraph, then all the
remaining available assets shall be distributed among the holders of the then
outstanding Series D Preferred Stock pro rata according to the number of then
outstanding shares of Series D Preferred Stock held by each holder thereof. The
merger or consolidation of the Company shall be considered a liquidation,
dissolution or winding up of the Company for purposes of this Section 4 (unless
in connection therewith the liquidation of the Company is specifically
approved).
Section 5. Optional Redemption.
(a) Change of Control. In the event that any Change of Control shall
occur at any time while any shares of Series D Preferred Stock are outstanding,
each holder of Series D Preferred Stock shall have the right to give notice that
it is exercising a Change of Control election (a "Change of Control Election"),
with respect to all or any number of such holder's shares of Series D Preferred
Stock, during the period (the "Exercise Period") beginning on the 10th day and
ending on the 30th day after the date of such Change of Control. Upon any such
election, the Company shall redeem for cash each of such holder's shares to the
extent permitted by applicable law, at a redemption price per share equal to the
Liquidation Preference thereof plus the amount of accumulated and unpaid
dividends as of the date of redemption, plus an amount per share equal to the
dividends that would have accumulated on the Series D Preferred Stock, at the
Dividend Rate then in effect, from the date of redemption to and including the
fifth anniversary of April 14, 2000 (the "Change of Control Redemption Price").
(b) On or before the tenth (10th) day after a Change of Control, the
Company shall mail to all holders of record of the Series D Preferred Stock at
their respective addresses as the same shall appear on the books of the Company
as of such date, a notice disclosing (i) the Change of Control, (ii) the Change
of Control Redemption Price per share of the Series D Preferred Stock applicable
hereunder, and (iii) the procedure which the holder must follow to exercise the
redemption right provided above. To exercise the Change of Control Election, if
applicable, a holder of the Series D Preferred Stock must deliver during the
Exercise Period
-10-
written notice to the Company (or an agent designated by the Company for such
purpose) of the holder's exercise of the Change of Control Election, accompanied
by each certificate evidencing shares of the Series D Preferred Stock with
respect to which the Change of Control Election is being exercised, duly
endorsed for transfer. On or prior to the fifth (5th) Business Day after
expiration of the Exercise Period, the Company shall accept for payment all
shares of Series D Preferred Stock properly surrendered to the Company (or an
agent designated by the Company for such purpose) during the Exercise Period for
redemption in connection with the exercise of the Change of Control Election and
shall cause payment to be made in cash for such shares of Series D Preferred
Stock. If at the time of any Change of Control, the Company does not have
sufficient capital and surplus legally available to purchase all of the
outstanding shares of Series D Preferred Stock, the Company shall take all
measures permitted under the Delaware General Corporation Law to increase the
amount of its capital and surplus legally available, and the Company shall offer
in its written notice of such Change of Control to purchase as many shares of
Series D Preferred Stock as it has capital and surplus legally available
therefor, ratably from the holders thereof in proportion to the total number of
shares tendered, and shall thereafter from time to time, as soon as it shall
have capital and surplus legally available therefor, offer to purchase as many
shares of Series D Preferred Stock as it has capital and surplus available
therefor until it has offered to purchase all of the outstanding shares of
Series D Preferred Stock.
(c) Optional Redemption by Company. At any time after the eighth
anniversary of April 14, 2000, the Company may, upon sixty (60) days notice to
the holders of the Series D Preferred Stock, redeem all, but not less than all,
of the then outstanding shares of Series D Preferred Stock at a redemption price
per share equal to the Liquidation Preference thereof plus the amount of any
accumulated and unpaid dividends as of such date (the "Redemption Price").
(d) Status of Redeemed Shares. Any shares of Series D Preferred Stock
which shall at any time have been redeemed pursuant to this Section 5 shall,
after such redemption, have the status of authorized but unissued shares of
Preferred Stock, without designation as to series.
Section 6. Voting Rights. (a) Except as otherwise provided by
applicable law and in addition to any voting rights provided by law, the holders
of Series D Preferred Stock:
(i) shall be entitled to vote together with the holders of the Common
Stock as a single class on all matters submitted for a vote of holders of
Common Stock;
(ii) shall have such other voting rights as are specified in the
Certificate of Incorporation or as otherwise provided by Delaware General
Corporation Law; and
(iii) shall be entitled to receive notice of any stockholders' meeting
in accordance with the Certificate of Incorporation and Bylaws of the
Company.
Each share of Series D Preferred Stock shall entitle the holder
thereof to cast one vote for each vote that such holder would be entitled to
cast had such holder converted its Series D Preferred Stock into shares of
Common Stock as of the date immediately prior to the record date for determining
the stockholders of the Company eligible to vote on any such matter.
-11-
(b) In addition to the other voting rights set forth herein, for so
long as the Purchaser shall own at least one share of Series D Preferred Stock
and the Purchaser and its Permitted Transferees collectively hold a number of
Shares that equals or exceeds the following percentages, the following
provisions shall apply:
(i) The holders of Series D Preferred Stock shall have the exclusive
right, voting as a single class, to elect the following number of directors
to serve on the Board of Directors (each such director is referred to as a
"Preferred Stock Director") in the event that the Purchaser and its
Permitted Transferees collectively beneficially own securities of the
Company that constitute, or if converted into Common Stock would constitute
the following percentages of the aggregate issued and outstanding Common
Stock: (w) less than 10%, no Preferred Stock Directors; (x) at least 10%
but no more than 33-1/3%, three (3) Preferred Stock Directors (for the
purposes of this clause (x), the Previously Issued Warrant and the Warrants
shall be included in the calculation of the Purchaser's beneficial
ownership); (y) at least 33-1/3% but no more than 70%, six (6) Preferred
Stock Directors (for the purposes of this clause (y), the Previously Issued
Warrant and the Warrants shall be included in the calculation of the
Purchaser's beneficial ownership); and (z) at least 70%, seven (7)
Preferred Stock Directors (for the purposes of this clause (z), the
Previously Issued Warrant and the Warrants shall not be included in the
calculation of the Purchaser's beneficial ownership); provided that, so
long as any loans or commitments made to the Company by the holders of
Series D Preferred Stock or any of their respective affiliates are
outstanding, the holders of Series D Preferred Stock shall have the
exclusive right, voting as a single class, to elect three (3) Preferred
Stock Directors. In any such election the holders of Series D Preferred
Stock shall be entitled to cast one vote per share of Series D Preferred
Stock held of record on the record date for the determination of the
holders of Series D Preferred Stock entitled to vote on such election. Each
of the initial Preferred Stock Directors shall be appointed by the Board of
Directors on or before April 14, 2000 and shall be apportioned by the Board
of Directors among the three classes of directors so as to ensure that no
one class has more than one director more than any other class; and
thereafter the Preferred Stock Directors shall be elected at the same time
as the other directors of the same class are elected. The Preferred Stock
Directors shall serve until the annual meeting of stockholders of the
Company at which the term of other directors of the same class expire or
until their respective successors shall be elected and shall qualify. Any
Preferred Stock Director may be removed by, and shall not be removed other
than by, the vote of the Requisite Holders, at a vote of the holders of
then outstanding shares of Series D Preferred Stock, voting as a separate
class, at a meeting called for such purpose or by written consent as
permitted by law and the Certificate of Incorporation and Bylaws of the
Company. If for any reason a vacancy exists in the Preferred Stock
Directors, by reason of death, resignation, retirement, disqualification,
removal or otherwise, such vacancy shall be filled by the holders of the
Series D Preferred Stock voting as a separate class in accordance with the
voting procedures set forth in this Section 6(b). The Preferred Stock
Directors shall be appointed by the Board of Directors to serve on each
committee of the Board of Directors in at least the same proportions that
the number of Preferred Stock Directors bears to the total number of
directors then comprising the Board of Directors.
-12-
(ii) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, without approval of the Requisite holders,
voting as a separate class, take action (or fail to take action) prohibited
by the Purchase Agreement.
(c) Notwithstanding any provision of this Section 6 or any other
provision of this Certificate of Designations, the holders of Series D Preferred
Stock shall not be entitled to vote (with the holders of Common Stock or
otherwise) on any merger involving the Company.
Section 7. Conversion Rights.
(a) General. Subject to and upon compliance with the provisions of
this Section 7, the holders of the shares of Series D Preferred Stock shall be
entitled, at their option, at any time prior to the date fixed for redemption of
such shares, to convert all or any such shares of Series D Preferred Stock into
a number of fully paid and nonassessable shares of Common Stock (calculated as
to each conversion to the nearest 1/100th of a share). The number of shares of
Common Stock to which a holder of Series D Preferred Stock shall be entitled
upon conversion shall be determined by dividing (i) the Liquidation Preference
of such Series D Preferred Stock (including shares issuable in respect of
accumulated but unpaid dividends), plus the amount of any accumulated but unpaid
dividends as of the Conversion Date by (ii) the Conversion Price in effect at
the close of business on the Conversion Date (determined as provided in this
Section 7).
(b) Conversion Price. The conversion price (the "Conversion Price")
shall initially be $3.75 per share of Preferred Stock, subject to adjustment
from time to time in accordance with Section 7(d).
(c) Fractions of Shares. No fractional shares of Common Stock shall be
issued upon conversion of shares of Series D Preferred Stock. If more than one
share of Series D Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock to be issued
and which shall be computed on the basis of the aggregate number of shares of
Series D Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of
Series D Preferred Stock, the Company shall pay a cash adjustment in respect of
such fractional share in an amount equal to the product of such fraction
multiplied by the Fair Market Value of one share of Common Stock on the
Conversion Date.
(d) Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:
(i) Upon Issuance of Common Stock. If the Company shall, at any
time or from time to time after April 14, 2000, issue any shares of Common
Stock, options to purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable securities,
other than Series D Preferred Stock or Excluded Securities, without
consideration or for consideration per share less than either (x) the Conversion
Price in effect immediately prior to the issuance of such Common Stock or
securities or (y) the Daily Market Price of the Common Stock on the Business Day
on which the pricing of such issuance
-13-
occurs, then the Conversion Price shall forthwith be adjusted to a price equal
to the lower of (I) the Conversion Price in effect immediately prior thereto, or
(II) the lowest consideration per share for which such shares of Common Stock or
such options, rights or convertible or exchangeable securities are issued (plus
the additional consideration required to be paid upon exercise, exchange or
conversion of such options, rights or convertible or exchangeable securities).
(ii) Upon Acquisition of Common Stock. If the Company or any
Subsidiary shall, at any time or from time to time after April 14, 2000,
directly or indirectly, redeem, purchase or otherwise acquire (x) any shares of
Common Stock for a consideration per share greater than the Fair Market Value of
the Common Stock immediately prior to such event, or (y) any options to purchase
or rights to subscribe for Common Stock, any securities by their terms
convertible into or exchangeable for Common Stock (other than shares of Series D
Preferred Stock that are redeemed according to their terms), or any options to
purchase or rights to subscribe for such convertible or exchangeable securities,
in either case, for a consideration per share of Common Stock for which such
options, rights or convertible or exchangeable securities are exercisable,
convertible or exchangeable, that is greater than the amount, if any, by which
the Fair Market Value of Common Stock immediately prior to such event exceeds
the per share exercise, exchange, subscription, conversion or purchase price
applicable to such options, rights or convertible or exchangeable securities,
then, in the case of (x) or (y), the Conversion Price shall forthwith be lowered
to a price equal to the price obtained by multiplying:
(A) the Conversion Price in effect immediately prior to such
event, by
(B) a fraction of which (x) the denominator shall be the Fair
Market Value per share of Common Stock immediately prior to such event
and (y) the numerator shall be the result of dividing:
a) (1) the product of (A) the number of shares of Common Stock
outstanding on a fully-diluted basis immediately prior to
such event and (B) the Fair Market Value per share of Common
Stock, in each case immediately prior to such event, minus
(2) the aggregate consideration paid by the Company in such
event, by
b) the number of shares of Common Stock outstanding on a
fully-diluted basis immediately prior to such event, minus
the number of shares of Common Stock purchased or acquired,
or for which options, rights or convertible or exchangeable
securities purchased or acquired were exercisable,
convertible or exchangeable.
For purposes of this Section 7(d), "fully diluted basis" shall be
determined in accordance with the treasury method of GAAP and paragraph (iii) of
this Section 7(d).
(iii) For the purposes of any adjustment of a Conversion Price
pursuant to paragraphs (i) and (ii) of this Section 7(d), the following
provisions shall be applicable:
-14-
(1) In the case of the issuance of Common Stock for cash in a
public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor before deducting
therefrom any discounts, commissions or placement fees payable by the
Company to any underwriter or placement agent in connection with the
issuance and sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the Fair Market Value thereof as
determined in accordance with the Appraisal Procedure.
(3) In the case of the issuance of options to purchase or rights
to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities,
except for Shares of Series D Preferred Stock or options to acquire
Excluded Securities:
(a) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to have
been issued at the time such options or rights were issued
and for a consideration equal to the consideration
(determined in the manner provided in subparagraphs (1) and
(2) above), if any, received by the Company upon the
issuance of such options or rights plus the minimum purchase
price provided in such options or rights for the Common
Stock covered thereby;
(b) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange of any such
convertible or exchangeable securities or upon the exercise
of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been
issued at the time such securities, options, or rights were
issued and for a consideration equal to the consideration
received by the Company for any such securities and related
options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Company upon
the conversion or exchange of such securities or the
exercise of any related options or rights (the consideration
in each case to be determined in the manner provided in
paragraphs (1) and (2) above);
-15-
(c) on any change in the number of shares or exercise price of
Common Stock deliverable upon exercise of any such options
or rights or conversions of or exchanges for such
securities, other than a change resulting from the
anti-dilution provisions thereof, the applicable Conversion
Price shall forthwith be readjusted to such Conversion Price
as would have been obtained had the adjustment made upon the
issuance of such options, rights or securities not converted
prior to such change or options or rights related to such
securities not converted prior to such change been made upon
the basis of such change;
(d) upon the expiration of any such options or the termination
of any rights, convertible securities or exchangeable
securities, the applicable Conversion Price shall forthwith
be readjusted to such Conversion Price as would have been in
effect at the time of such expiration or termination had
such options, rights, convertible securities or exchangeable
securities, to the extent outstanding immediately prior to
such expiration or termination, never been issued; and
(e) no further adjustment of the Conversion Price adjusted upon
the issuance of any such options, rights, convertible
securities or exchangeable securities shall be made as a
result of the actual issuance of Common Stock on the
exercise of any such rights or options or any conversion or
exchange of any such securities.
(iv) Upon Stock Dividends, Subdivisions or Splits. If, at any
time after April 14, 2000, the number of shares of Common Stock outstanding is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the record
date for the determination of holders of Common Stock entitled to receive such
stock dividend, or to be affected by such subdivision or split-up, the
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of Series D Preferred Stock shall be
increased in proportion to such increase in outstanding shares.
(v) Upon Combinations. If, at any time after April 14, 2000, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, following the record date to determine shares affected by such
combination, the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each share of Series
D Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
-16-
(vi) Upon Reclassifications, Reorganizations, Consolidations or
Mergers. In the event of any capital reorganization of the Company, any
reclassification of the stock of the Company (other than a change in par value
or from par value to no par value or from no par value to par value or as a
result of a stock dividend or subdivision, split-up or combination of shares),
or any consolidation or merger of the Company with or into another corporation
(where the Company is not the surviving corporation or where there is a change
in or distribution with respect to the Common Stock), each share of Series D
Preferred Stock shall after such reorganization, reclassification,
consolidation, or merger be convertible into the kind and number of shares of
stock or other securities or property of the Company or of the successor
corporation resulting from such consolidation or surviving such merger, if any,
to which the holder of the number of shares of Common Stock deliverable
(immediately prior to the time of such reorganization, reclassification,
consolidation or merger) upon conversion of such Series D Preferred Stock would
have been entitled upon such reorganization, reclassification, consolidation or
merger. The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations, or mergers.
Notwithstanding anything contained in this Certificate of
Designations to the contrary, in the event that the Company shall effect any of
the transactions described in this clause (vi), each person (other than the
Company) which may be required to issue a new share of Series D Preferred Stock
as provided above, shall assume by written instrument delivered to, and
reasonably satisfactory to, the Requisite Holders (i) the obligations of the
Company under this Certificate of Designations (and if the Company shall survive
the consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under this Certificate of Designations) and (ii) the obligation to
deliver to all holders of Series D Preferred Stock such new share of Series D
Preferred Stock as, in accordance with the foregoing provisions of this clause
(vi), such holders of Series D Preferred Stock may be entitled to receive, and
such person shall have similarly delivered to such holders of Series D Preferred
Stock an opinion of counsel for such person, which counsel shall be reasonably
satisfactory to the Requisite Holders, stating that this Certificate of
Designations shall thereafter continue in full force and effect and that the
terms hereof (including, without limitation, all of the provisions of this
clause (vi), shall be applicable to the stock, securities, cash or property
which such person may be required to deliver upon any conversion of any of the
Series D Preferred Stock or such new share of Series D Preferred Stock or the
exercise of any right pursuant hereto.
(vii) Deferral in Certain Circumstances. In any case in which the
provisions of this Section 7(d) shall require that an adjustment shall become
effective immediately after a record date of an event, the Company may defer
until the occurrence of such event (1) issuing to the holder of any Series D
Preferred Stock converted after such record date and before the occurrence of
such event the shares of capital stock issuable upon such conversion by reason
of the adjustment required by such event and issuing to such holder only the
shares of capital stock issuable upon such conversion before giving effect to
such adjustments, and (2) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to Section 7(c) above; provided,
-17-
however, that the Company shall deliver to such holder an appropriate instrument
or due bills evidencing such holder's right to receive such additional shares
and such cash.
(viii) Other Anti-Dilution Provisions. (1) If the Company has
issued or issues any securities on or after April 14, 2000 containing provisions
protecting the holder or holders thereof against dilution in any manner more
favorable to such holder or holders thereof than those set forth in this Section
7(d), such provisions (or any more favorable portion thereof) shall be deemed to
be incorporated herein as if fully set forth in this Certificate of Designations
and, to the extent inconsistent with any provision of this Certificate of
Designations, shall be deemed to be substituted therefor; or (2) if any event
occurs as to which the foregoing provisions of this Section 7(d) are not
strictly applicable or, if strictly applicable, would not fairly and adequately
protect the conversion rights of the holders of the Series D Preferred Stock in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary to protect such purchase rights as aforesaid, but in no
event shall any such adjustment have the effect of increasing the Conversion
Price or decreasing the number of shares of Common Stock issuable upon the
conversion of the Series D Preferred Stock.
(ix) Appraisal Procedure. In any case in which the provisions of
this Section 7(d) shall necessitate that the Appraisal Procedure be utilized for
purposes of determining an adjustment to the Conversion Price, the Company may
defer until the completion of the Appraisal Procedure and the determination of
the adjustment (1) issuing to the holder of any share of Series D Preferred
Stock converted after the date of the event that requires the adjustment and
before completion of the Appraisal Procedure and the determination of the
adjustment, the shares of capital stock issuable upon such conversion by reason
of the adjustment required by such event and issuing to such holder only the
shares of capital stock issuable upon such conversion before giving effect to
such adjustment and (2) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to Section 7(c) above; provided,
however, that the Company shall deliver to such holder an appropriate instrument
or due bills evidencing such holder's right to receive such additional shares
and such cash.
(x) Exceptions. Section 7(d) shall not apply to (1) any issuance
of Common Stock upon exercise of any options or warrants outstanding on the date
hereof, (2) the issuance of shares of Common Stock in an aggregate amount not to
exceed 500,000 shares to XxXxxx Group, L.P., (3) the issuance of shares of
Common Stock in an aggregate amount not to exceed 2,600,000 shares upon exercise
of options or warrants that have been approved by the Board of Directors, or any
issuance of such options or warrants, (4) shares of Common Stock issued pursuant
to the Company's current employee stock purchase plan in an amount not to exceed
114,000 shares (the securities referred to in clauses (1), (2), (3) and (4)
being collectively referred to as "Excluded Securities"), or (5) any issuance of
Common Stock in a widely distributed underwritten public offering at a price per
share at least equal to the Conversion Price then in effect if the underwriting
discount does not exceed 7%.
-18-
Notwithstanding the foregoing, in the case of shares of Series D
Preferred Stock called for redemption, conversion rights will expire at the
close of business on the redemption date unless the Company defaults in making
the payment due upon redemption.
(e) Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the holder of any share of Series D Preferred Stock shall
surrender the certificate evidencing such share of Series D Preferred Stock,
duly endorsed or assigned to the Company in blank, at any office or agency of
the Company maintained for such purpose, accompanied by written notice to the
Company at such office or agency that the holder elects to convert such Series D
Preferred Stock or, if less than the entire amount thereof is to be converted,
the portion thereof to be converted. Series D Preferred Stock shall be deemed to
have been converted immediately prior to the close of business on the date (the
"Conversion Date") of surrender of such shares of Series D Preferred Stock for
conversion in accordance with the foregoing provisions, and at such time the
rights of the holder of such shares of Series D Preferred Stock as a holder
shall cease, and the person or persons entitled to receive the Common Stock
issuable upon conversion shall be treated for all purposes as the record holder
or holders of such Common Stock as and after such time. As promptly as
practicable on or after the Conversion Date, the Company shall issue and shall
deliver at any office or agency of the Company maintained for the surrender of
Series D Preferred Stock a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 7(c). In the case of any
certificate evidencing shares of Series D Preferred Stock which is converted in
part only, upon such conversion the Company shall execute and deliver a new
certificate evidencing the number of shares of Series D Preferred Stock that are
not converted.
(f) Notice of Adjustment of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided:
(i) the Company shall compute the adjusted Conversion Price in
accordance with Section 7(d) and shall prepare a certificate signed by
the Company's independent accounting firm setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be
filed at each office or agency maintained for such purpose for
conversion of shares of Series D Preferred Stock; and
(ii) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be
prepared by the Company and, as soon as practicable after it is
prepared, such notice shall be mailed by the Company at its expense to
all holders of Series D Preferred Stock at their last addresses as
they shall appear in the stock register.
(g) Notice of Certain Corporate Action.
In case:
-19-
(i) the Company shall take an action, or an event shall occur,
that would require a Conversion Price adjustment pursuant to Section
7(d);
(ii) the Company shall grant to the holders of its Common Stock
rights or warrants to subscribe for or purchase any shares of capital
stock of any class;
(iii) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock),
or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any stockholders of the Company
is required, or of the sale or transfer of all or substantially all of
the assets of the Company;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company or any Subsidiary shall commence a tender offer
for all or a portion of the outstanding shares of Common Stock (or
shall amend any such tender offer to change the maximum number of
shares being sought or the amount or type of consideration being
offered therefor);
then the Company shall cause to be filed at each office or agency maintained for
such purpose, and shall cause to be mailed to all holders of Series D Preferred
Stock at their last addresses as they shall appear in the stock register, at
least 30 days prior to the applicable record, effective or expiration date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or granting of rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record who will be entitled to such dividend, distribution,
rights or warrants are to be determined, (y) the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of the amendment thereto). Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Series D Preferred Stock. Neither the failure
to give any such notice nor any defect therein shall affect the legality or
validity of any action described in clauses (i) through (v) of this Section
7(g).
(h) Company to Reserve Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of the
authorized but unissued Common Stock or out of the Common Stock held in
treasury, for the purpose of effecting the conversion of Series D Preferred
Stock, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding shares of Series D Preferred Stock. Before taking
any
-20-
action that would cause an adjustment reducing the conversion price below the
then par value (if any) of the shares of Common Stock deliverable upon
conversion of the Series D Preferred Stock, the Company will take any corporate
action that, in the opinion of its counsel, is necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
Common Stock at such adjusted conversion price.
(i) Taxes on Conversions. The Company will pay any and all
original issuance, transfer, stamp and other similar taxes that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Series D Preferred Stock pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the holder of the share(s) of Series D Preferred Stock to be converted, and no
such issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid.
Section 8. Preemptive Rights. (a) Each holder of Series D
Preferred Stock shall have the right to purchase its Pro Rata Amount of any New
Securities that the Company may, from time to time, propose to sell and issue.
In the event the Company proposes to issue any New Securities, it shall give all
holders of Series D Preferred Stock written notice, at their last addresses as
they shall appear in the stock register, at least 20 Business Days before such
issuance, describing the type of New Securities, the price and number of shares
(or principal amount) and the general terms upon which the Company proposes to
issue the same. Each such holder shall have 20 Business Days from the date of
receipt of any such notice to agree to purchase up to the amount of New
Securities equal to such holder's Pro Rata Amount of such New Securities for the
price and upon the general terms specified in the notice by giving written
notice to the Company, at its principal office or such other address as may be
specified by the Company in its written notice to the holders, of such holder's
intention to purchase such New Securities at the initial closing of the sale of
New Securities and the number of such New Securities that such holder intends to
purchase.
(b) In the event a holder of Series D Preferred Stock fails to
exercise in full its right of participation within said 20 Business Day period
as set forth in Section 8(a) above, the Company shall have thirty (30) days
thereafter to sell additional amounts of New Securities respecting which such
holder's option was not exercised, at the price and upon the terms specified in
the Company's notice. The Company shall not issue or sell any additional amounts
of New Securities after the expiration of such 30-day period without first
offering such securities to the holders of Series D Preferred Stock in the
manner provided above.
(c) The rights set forth in this Section 8, including the notice
provisions relating thereto, may be waived by the Requisite Holders.
Section 9. Event of Non-Compliance.
-21-
Upon the occurrence of any Event of Non-Compliance, the Company
shall give the holders of Series D Preferred Stock prompt notice of such
occurrence and shall use reasonable commercial efforts to cure promptly such
Event of Non-Compliance.
Section 10. Indemnification and Insurance. (a) The Company shall
indemnify its directors to the fullest extent authorized or permitted by law, as
now or hereafter in effect, and such right to indemnification shall continue as
to a person who has ceased to be a director of the Company and shall inure to
the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Company shall not be obligated to indemnify any
director (or his or her heirs, executors or personal or legal representatives)
in connection with a proceeding (or part thereof) initiated by such person
unless such proceeding (or part thereof) was authorized or consented to by the
Board of Directors. The right to indemnification conferred by this Section 10
shall include the right to be paid by the Company the expenses incurred in
defending or otherwise participating in any proceeding in advance of its final
disposition. The rights to indemnification and to the advance of expenses
conferred in this Section 10 shall not be exclusive of any other right which any
person may have or hereafter acquire under the Company's Certificate of
Incorporation or Bylaws, any statute, agreement, vote of stockholders or
disinterested directors or otherwise. Any repeal or modification of this Section
10 or this Certificate of Designations shall not adversely affect any rights to
indemnification and to the advancement of expenses of a director of the Company
existing at the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
(b) The Company shall purchase and maintain insurance on behalf
of any person who is or was a director of the Company against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Company would
have the power or the obligation to indemnify such person against such liability
under the provisions of Section 10(a). Such insurance shall be in amounts and on
other terms as are customary for corporations similar in size to the Company.
-22-
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by Xxxxxx Xxxxxxxxx, its Chairman, and attested by
Xxxx Xxxxxxxxx, its Assistant Secretary, this ___ day of August, 2001.
By:_________________________________
Name: Xxxxxx Xxxxxxxxx
Title: Chairman
Attested:
By:_________________________
Name: Xxxx Xxxxxxxxx
Title: Assistant Secretary
